A fatal collision between a Jet Ski and a boat on a Wisconsin lake raised a compelling question: Does an auto policy’s uninsured motorist coverage stretch from the road to the water?
In Cullen v. Franecki, the Wisconsin Court of Appeals answered this question and affirmed the circuit court’s denial of coverage, holding that the boat in question did not fall within the policy’s clear and straightforward definition of an “uninsured motor vehicle” (or “underinsured motor vehicle”) in the policy’s UM/UIM endorsement.
In August 2020, Richard Cullen was riding a Jet Ski on Tichigan Lake when he collided with a boat operated by Paul Franecki. Richard died from his injuries. His daughter, Audrey, heard the collision from a nearby lake house and observed the immediate aftermath of the collision and rescue efforts. At the time of the accident, the Cullens held an automobile insurance policy with Erie Insurance Exchange that included a UM/UIM endorsement.
Following the accident, the Cullens filed suit against Franecki and several insurance companies, including Erie, alleging that Franecki's negligence directly and proximately caused Richard's death and Audrey's severe emotional distress. Erie filed a motion seeking a declaration that the UM/UIM endorsement did not cover any damages that might be awarded against Franecki because, as defined in the policy, the boat he was driving was not an “uninsured motor vehicle” or an “underinsured motor vehicle” because it was “designed for use mainly off public roads while not on public roads.” The circuit court agreed and granted Erie's motion.
On appeal, the core dispute was definitional: whether the boat could be an “uninsured motor vehicle” or “underinsured motor vehicle” under the policy’s terms and, thus, whether coverage was triggered. In relevant part, the insuring agreement of the UM/UIM endorsement afforded coverage for bodily injury to any insured if he or she is legally entitled to recover from the owner or operator of an “uninsured motor vehicle” or an “underinsured motor vehicle.” Additionally, the damages suffered by the insured must result from a motor vehicle accident arising out of the ownership, maintenance, or use of the “uninsured motor vehicle” or “underinsured motor vehicle.” The endorsement defines the terms “uninsured motor vehicle” or “underinsured motor vehicle,” but those definitions specifically exclude “motor vehicles” that are “designed for use mainly off public roads while not on public roads.”
As part of its analysis, the appeals court turned to prior precedent, Schleusner v. IMT Insurance Co., in which it examined the same definitional language and reached a similar conclusion. The appeals court reasoned that like the demolition derby vehicle in Schleusner, the boat in this case was not designed for use mainly on a public road and was not being used on a public road at the time of the accident.
The Cullens offered several arguments in favor of coverage that the appeals court deemed unpersuasive. First, the Cullens argued that Franecki's boat fell within the Erie policy's definition of the term “motor vehicle” because, as defined by Wisconsin statute, it is a self-propelled vehicle that must be registered in Wisconsin. In addition, the Cullens cited prior precedent in which the definition of “motor vehicle” in a farmowners’ policy was found to be ambiguous and the policy was construed in favor of coverage. In rejecting these arguments, the appeals court noted that the Cullens’ focus on the definition of “motor vehicle” in the Erie policy was misplaced because the UM/UIM endorsement did not provide coverage for damages resulting from an accident involving any “motor vehicle.” Therefore, the court of appeals reasoned that if Franecki's boat were a “motor vehicle” under Erie's policy, there is no UM/UIM coverage because the boat is not an “uninsured motor vehicle” or an “underinsured motor vehicle.”
Next, the Cullens argued that the relevant portions of the definitions of “uninsured motor vehicle” or “underinsured motor vehicle” are exclusionary in nature and that the circuit court erred in not construing the language narrowly and in the Cullens’ favor. The Cullens also added that boats like Franecki's can often be transported over public or private roads using trailers. The appeals court rejected these arguments and reasoned that the definitions of “uninsured motor vehicle” and “underinsured motor vehicle” found in the Erie policy are not exclusions; they are definitions. The appeals court further emphasized that even if the definitional language at issue were an exclusion, the rule requiring narrow construction applies only if an exclusion's effect is uncertain, and here there is no uncertain effect because a reasonable insured would think a boat is not “designed for use mainly off public roads.”
In their final argument, the Cullens claimed that the policy contains a contextual ambiguity because Erie used obfuscating language in the definitions of “uninsured motor vehicle” and “underinsured motor vehicle” to bar coverage for damages caused by boats; and the Cullens assumed, like most consumers, that UM/UIM coverage would be personal, portable and follow them whether it was on foot, in a motor vehicle or on a Jet Ski. Yet again, the appeals court found that this argument failed noting that it has been established that Franecki's boat satisfies both of the conditions that render it not an uninsured or underinsured motor vehicle.
Ultimately, the appeals court agreed with the circuit court that Franecki’s boat is not an “uninsured motor vehicle” or an “underinsured motor vehicle” under the UM/UIM endorsement. The appeals court noted that the relevant language in the definitions of those terms incorporates two conditions: if the vehicle at issue is “designed for use mainly off public roads” and its use at the time of the accident is “not on public roads,” then it is not an uninsured or underinsured motor vehicle. In addition, the appeals court noted that Franecki’s boat satisfied both conditions: it was designed for use mainly on bodies of water, not on public roads, and it was being driven at the time of the accident on Tichigan Lake, not a public road.
In affirming the circuit court’s order in favor of Erie, the Wisconsin Court of Appeals emphasized that the relevant policy language was clear and straightforward despite its lack of specific reference to boats or watercraft and, therefore, the Cullens failed to establish a basis to ignore or rewrite the policy language in dispute. Therefore, the appeals court held, as a matter of law, that the circuit court was correct in determining that the boat Franecki was operating at the time of the accident was not an uninsured or underinsured motor vehicle, and thus Erie's policy did not cover the Cullens’ claimed damages.
